AI Drafter 
TaxTMI 
TaxTMI 
2022 (12) TMI 638
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.... of the Income Tax Act, 1961 ("the Act') for the Assessment Year 2004-05. 2. The assessee has raised the following grounds of appeal:- "1. For that the Ld. CIT(A) has erred in holding that the interest paid on security of Rs.27.73 lakhs has no direct nexus with the interest received by the appellant. 2. For that the Ld. CIT(A) has failed to appreciate that as per Explanation (baa) of Section 80HHC(4C), the net interest is to be reduced while working out deduction u/s 80HHC and hence netting off of interest is prescribed by the provisions of the Act as well as the judgment of Apex Court in the case of Vikas Kalra Vs CIT reported in 345 ITR 557. 3. For that the Ld. CIT(A) has erred in affirming charging of intere....
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....e time of hearing of appeal." 3. The first issue raised through Ground Nos. 1 & 2 relates to deduction u/s 80HHC of the Act. The assessee is a limited company engaged in manufacturing and selling of pharmaceutical products. It claimed deduction u/s 80HHC of the Act. The ld. Assessing Officer while computing the deduction in compliance to the direction of the Tribunal, vide order dt. 26/02/2010 computed the deduction wherein net interest income was also to be considered. During the year, the assessee earned interest of Rs.16.47 Crores and paid interest of Rs.2.48 Crores. Interest paid included the interest paid on security deposits at Rs.27.73 Lakhs. The ld. Assessing Officer observed that the said interest paid on security deposit which ....
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....We, therefore, respectfully following the judgment of the Hon'ble Apex Court, find merit in this contention of the ld. Counsel for the assessee and direct the ld. Assessing Officer to reduce 90% of the net interest received from the net profit for the purpose of calculating deduction u/s 80HHC of the Act. In the result, Ground Nos. 1 & 2 of the assessee are allowed. 9. Now we take up Ground Nos. 3 to 7 which relates to the correctness of interest charged u/s 234B of the Act. The ld. Counsel for the assessee has contended that the regular assessment u/s 143(3) of the Act was completed on 29/12/2006 and, therefore, the cut-off date for charging the interest would be December, 2006, whereas the ld. CIT(A) has confirmed the action of the Ass....
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....t the rate of one per cent for every month or part of a month comprised in the period commencing on the 1st day of April next following such financial year and ending on the date of the reassessment or recomputation under section 147 or section 153A, on the amount by which the tax on the total income determined on the basis of the reassessment or recomputation exceeds the tax on the total income determined under sub--section (1) of section 143 or on the basis of the regular assessment as referred to in sub--section (1), as the case may be.] (4) Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 26475[***], the amount on which interest....
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.... 4 & 5, raised by the assessee are allowed. 14. Ground Nos. 6 & 7 of the instant appeal challenges the calculation of interest u/s 234B of the Act and the contention made by the ld. Counsel for the assessee has substantial merit because in the assessment order framed on 21/12/2009, interest u/s 234B of the Act has been charged at Rs.12,92,191/- where as in the order dt. 23/12/2010, interest of Rs.19,12,454/- has been charged. So far as the difference in the total income assessed is concerned, there is only an increase of Rs.45,393/-, in the order dt. 23/12/2010 as against the order dt. 21/12/2009. There is apparently a calculation error/mistake which needs necessary rectification. Therefore, we restore the issues raised in Ground Nos. 6 ....